A man puts gas in his car at a Shell Station in Palo Alto, Calif., Thursday, Jan. 13, 2011. Oil prices fell to near $90 a barrel Friday as a disappointing U.S. jobs figure and a move by China to cool off economic growth dampened expectations of higher crude demand.

Front Range drivers should prepare to pay more to fill their tanks as regular unleaded gasoline breaks through $3 a gallon, analysts warn.

Prices at the pump have followed the rising price of oil and average $3 or more a gallon for regular unleaded in all but 15 states, according to AAA’s Daily Fuel Gauge Report.

“We have been enjoying some of the lowest gasoline prices in the country, but I do believe we will see gasoline above $3 a gallon sometime this spring,” said Wave Dreher, a spokeswoman with AAA Colorado.

Driving picks up as the weather improves, increasing demand for gasoline. But with oil prices above $90 a barrel, Colorado may reach $3 a gallon before the snow melts, said Bryant Gimlin with Devo Capital Management, a commodity-trading adviser based in Pagosa Springs.

A gallon of regular unleaded gasoline in Colorado averaged $2.91 Monday, up from $2.74 a month earlier, according to the automobile association’s fuel report. That compares with the national average Monday of $3.10 a gallon, up from $2.98 a month earlier.

Prices along the Front Range were approaching $2.90 a gallon, a discount that reflects the region’s abundant supply from refineries and pipelines, analysts said.

Colorado and Missouri are tied for the third-lowest gasoline prices in the country, with Utah and Wyoming having the lowest.

Should oil hit $100 a barrel, that would translate into gasoline prices in Colorado of around $3.50 a gallon, Gimlin predicts.

Gimlin, however, sees oil at $85 a barrel as more reasonable, which would bring gasoline back to $3 a gallon later this year.

Those prices wouldn’t crush consumer budgets or the economic recovery and would allow producers to earn enough return to keep supplies flowing, he said.

“Between $2 and $3 a gallon, I’m OK,” said Michael Shahan, an Englewood resident. “At $3 or higher, it makes a difference. Every little bit hurts.”

His comments highlight a paradox. Rising energy prices, supposedly justified by economic recovery, can slow growth if they get too high.

Analysts cite different reasons for the price increases, a chief one being stronger energy demand from emerging economies such as China.

Another is an accommodative U.S. monetary policy that weakens the U.S. dollar and makes commodities more expensive.

The Organization of the Petroleum Exporting Countries on Monday lifted its projections for petroleum demand in 2011 by 200,000 barrels a day to 29.4 million barrels, citing stronger global economic growth than initially expected.

But the group rejects an increase in production quotas, arguing that speculators have pushed oil prices higher than what the fundamentals justify.

“We are not seeing the crude shortfall that you would think would precipitate the increase in prices,” said Mark Larson, executive director for the Colorado Wyoming Petroleum Marketers Association.

With returns paltry in other markets, speculators are targeting commodities, creating unnecessary volatility that upcoming regulations should help contain, he said.

Despite the U.S. and other developed countries being several months into a recession, speculators drove oil above $147 a barrel in summer 2008, pushing gasoline prices above $4 a gallon.

As the depths of the downturn became apparent in September, oil prices quickly retreated and reached around $34 a barrel just before that Christmas.

Two years ago, gasoline prices for regular unleaded gasoline in Colorado averaged $1.59 a gallon.

Aldo Svaldi has worked at The Denver Post since 2000. His coverage areas have included residential real estate, economic development and the Colorado economy. He's also worked for Financial Times Energy, the Denver Business Journal and Arab News.

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